Managers of senior secured floating rate loan funds are continuing to build assets through the retail route with new launches and significant inflows into existing funds. Eaton Vance Corp. is leading the way, raising $680 million last Friday through the Eaton Vance Floating Rate Income Trust. With leverage, the total assets will be $1.1 billion, bringing Eaton Vance's bank loan assets under management to almost $15 billion, stated Tom Faust, cio of Eaton Vance. This is a rise of almost $4.5 billion since last October, he added.
Eaton Vance may be the biggest, but other funds are also capitalizing on investor appetite. Nuveen Investments is now launching a third retail loan fund and New York Life Investment Management and Four Corners Capital Management have both recently raised new funds. Managers are also reporting significant inflows (For a listing of all the funds, performance and net assets, see charts, page 6).
Faust explained that the timing behind the interest is obvious considering that the return is tied to LIBOR. "It's driven by our belief, and one that is shared by 99% of the world, that interest-rates will go up," Faust stated. "That raises principal risk value on bond funds," he added. Eaton Vance is recommending investors reduce interest-rate exposure and shorten exposure, he noted.
Some market participants have raised concerns that too much money is flowing into the asset class too quickly, leading to scarcity of collateral and shrinking spreads. But Faust does not consider this is a major issue. "This is a big market that is not dominated by retail investors but by banks holding loans on the balance sheet," he noted. He also suggested that as long-term rates go higher this will lead to more supply from corporations, balancing out the supply dynamic. A Nuveen spokewoman concurred that the manager is capitalizing on interest from investors concerned about interest-rate risk. The Nuveen bank loan team is led by Gunther Stein and Lenny Mason.
The tables below, provided by Lipper, A Reuters Company, show performance figures for the floating-rate loan funds.
Open-End Loan Participation Funds
| 5/30/2003 | 5/31/2001 | TNA | TNA | |||
| 5/28/2004 | 5/28/2004 | Last M-E | Last M-E | |||
| Fund | FPO | Cumulative | Annualized | 5/31/2004 | 4/30/2004 | Manager |
| Name | Date | Total Return | Total Return | (Mil $) | (Mil $) | Name |
| Eaton Vance Flt Rt;A | 5/5/2003 | 4.6 | N/A | 842.6 | 696.8 | Page/Swaffield |
| Eaton Vance Flt Rt;Adv | 2/7/2001 | 4.53 | 3.44 | 559.1 | 474.6 | Page/Swaffield |
| Eaton Vance Flt Rt;B | 2/5/2001 | 3.86 | 2.7 | 285.4 | 270.9 | Page/Swaffield |
| Eaton Vance Flt Rt;C | 2/1/2001 | 3.75 | 2.7 | 1040.9 | 962 | Page/Swaffield |
| Eaton Vance Flt Rt;Ins | 1/30/2001 | 4.9 | 3.73 | 194.2 | 170.9 | Page/Swaffield |
| Eaton Vance F-R HI;A | 5/7/2003 | 6.25 | N/A | 257.3 | 210.1 | Team Managed |
| Eaton Vance F-R HI;Adv | 9/7/2000 | 6.29 | 4.05 | 253.5 | 200 | Team Managed |
| Eaton Vance F-R HI;B | 9/5/2000 | 5.51 | 3.24 | 177.9 | 174.8 | Team Managed |
| Eaton Vance F-R HI;C | 9/5/2000 | 5.62 | 3.27 | 432.9 | 406.7 | Team Managed |
| Eaton Vance F-R HI;Ins | 9/15/2000 | 6.67 | 4.3 | 9.4 | 6 | Team Managed |
| Fidelity Adv Float;A | 8/16/2000 | 4.28 | 3.62 | 195.3 | 167.1 | Christine McConnell |
| Fidelity Adv Float;B | 8/16/2000 | 3.72 | 3.02 | 156.8 | 142.3 | Christine McConnell |
| Fidelity Adv Float;C | 8/16/2000 | 3.64 | 2.98 | 392.2 | 350.3 | Christine McConnell |
| Fidelity Adv Float;Ins | 8/16/2000 | 4.51 | 3.78 | 92.5 | 70 | Christine McConnell |
| Fidelity Adv Float;T | 8/16/2000 | 4.19 | 3.5 | 178 | 135.4 | Christine McConnell |
| Fidelity Float Rate HI | 9/19/2002 | 4.54 | N/A | 1369.5 | 1254.8 | Christine McConnell |
| Franklin Inv:Float;A | 5/1/2001 | 4.99 | 4.29 | 362.5 | 254.4 | Hsu/Lam/Gregory |
| Franklin Inv:Float;Adv | 5/1/2001 | 5.37 | 4.59 | 13 | 11.2 | Hsu/Lam/Gregory |
| Franklin Inv:Float;B | 5/1/2001 | 4.36 | 3.63 | 55.4 | 39.5 | Hsu/Lam/Gregory |
| Franklin Inv:Float;C | 5/1/2001 | 4.55 | 3.91 | 191.7 | 151.6 | Hsu/Lam/Gregory |
| MainStay Float Rate;A | 5/3/2004 | N/A | N/A | 69.2 | N/A | Dial/Malloy |
| MainStay Float Rate;B | 5/3/2004 | N/A | N/A | 16.3 | N/A | Dial/Malloy |
| MainStay Float Rate;C | 5/3/2004 | N/A | N/A | 17.2 | N/A | Dial/Malloy |
| MainStay Float Rate;I | 5/3/2004 | N/A | N/A | 0.1 | N/A | Dial/Malloy |
| Average/Total | - | 4.81 | 3.57 | 7162.9 | 6149.4 |
Closed-End Loan Participation Funds
| 5/30/2003 | 5/31/2001 | |||||
| 5/28/2004 | 5/28/2004 | Last M-E | Last M-E | |||
| Fund | FPO | Cumulative | Annualized | 5/31/2004 | 4/30/2004 | Manager |
| Name | Date | Total Return | Total Return | (Mil $) | (Mil $) | Name |
| Columbia Flt Advtg;A | 1/24/2000 | 15.06 | 8.21 | 193.3 | 185.7 | Dougherty/Okada |
| Columbia Flt Advtg;B | 1/24/2000 | 14.66 | 7.89 | 117.6 | 115.3 | Dougherty/Okada |
| Columbia Flt Advtg;C | 1/24/2000 | 14.48 | 7.73 | 241.7 | 228.7 | Dougherty/Okada |
| Columbia Flt Advtg;Z | 1/27/2000 | 15.45 | 8.58 | 39 | 35.8 | Dougherty/Okada |
| Columbia Inst Flt Rt | 11/20/1998 | 11.98 | 6.7 | 89.2 | 89 | Doughtery/Okada |
| Eaton Vance Adv Sen Flt | 3/20/1998 | 6.93 | 3.61 | 67.2 | 57.4 | Page/Swaffield |
| Eaton Vance Inst Senior | 5/3/1999 | 7.27 | 4.06 | 29.5 | 27.2 | Page/Swaffield |
| Eaton Vance Prm Rate | 8/4/1989 | 6.79 | 3.54 | 1729.1 | 1804.6 | Page/Swaffield |
| Eaton Vance Sen Flt Rt | 11/28/2003 | N/A | N/A | 626.1 | 631 | Page/Russ/Swaffield |
| Eaton Vance Senior Inc | 10/27/1998 | 9.59 | 5.46 | 316.9 | 318.9 | Page/Reddinig/Swaffield |
| EV Classic Sr Fltng-Rt | 2/22/1995 | 6.64 | 3.38 | 1368.4 | 1350 | Page/Swaffield |
| First Tr/4 Cor Sr Fl | 9/25/2003 | N/A | N/A | 94.2 | 94.4 | Team Managed |
| First Tr/4 Cor Sr Fl II | 5/25/2004 | N/A | N/A | N/A | N/A | Team Managed |
| Floating Rate Inc Strat | 10/28/2003 | N/A | N/A | 344.5 | 347 | Matteo/Booth |
| Franklin Floating Rate | 10/9/1997 | 11.42 | 3.53 | 1223.9 | 1176.5 | Hsu/Lam/Gregory |
| ING Prime Rate Trust | 5/2/1988 | 13.25 | 4.56 | 1014.5 | 1019.6 | Team Managed |
| ING Senior Income;A | 4/2/2001 | 6.95 | 5.81 | 275.5 | 219.3 | Team Managed |
| ING Senior Income;B | 4/2/2001 | 6.44 | 5.26 | 87.1 | 74.8 | Team Managed |
| ING Senior Income;C | 4/2/2001 | 6.44 | 5.31 | 402.3 | 350.4 | Team Managed |
| ING Senior Income;Q | 4/2/2001 | 6.91 | 5.73 | 124.5 | 131.9 | Team Managed |
| Merrill Sen Fltng Rt | 11/3/1989 | 9.23 | 4.66 | 764.9 | 754.2 | Booth/Matteo |
| Merrill Sen Fltng Rt II | 3/22/1999 | 9.04 | 4.44 | 240.5 | 218.1 | Booth/Matteo |
| Morg Stan Prime Inc Tr | 11/30/1989 | 13.01 | 5.38 | 1181.2 | 1169.2 | Howard Tiffen |
| Nuveen Float Rate Inc | 3/26/2004 | N/A | N/A | 661.6 | 641.3 | Team Managed |
| Nuveen Senior Income | 10/26/1999 | 16.08 | 8.55 | 248 | 248.6 | Stein/Mason |
| Oppenheimer Sen Flt;A | 9/7/1999 | 9.09 | 5.07 | 248.9 | 195.7 | Hui/Welsh/Zimmer |
| Oppenheimer Sen Flt;B | 9/7/1999 | 8.51 | 4.53 | 240.7 | 218.6 | Hui/Welsh/Zimmer |
| Oppenheimer Sen Flt;C | 9/7/1999 | 8.53 | 4.55 | 471.3 | 411.9 | Hui/Welsh/Zimmer |
| PIMCO Floating Rate Inc | 8/26/2003 | N/A | N/A | 342.9 | 344.5 | Hinman/Rosiak/Kennedy |
| SunAmerica Sen Float;B | 8/6/1998 | 7.63 | 4.19 | 27.5 | 27.5 | Jansen/Pucillo |
| SunAmerica Sen Float;C | 8/6/1998 | 7.61 | 4.15 | 144.8 | 131.5 | Jansen/Pucillo |
| SunAmerica Sen Float;D | 4/25/2001 | 8.05 | 4.47 | 16.4 | 15.5 | Jansen/Pucillo |
| Van Kampen Senior Income | 6/23/1998 | 13.55 | 6.02 | 1544.2 | 1547.2 | Howard Tiffen |
| Van Kampen Sr Loan;B | 10/4/1989 | 14.13 | 5.3 | 1765.4 | 1760.2 | Howard Tiffen |
| Van Kampen Sr Loan;C | 6/16/2003 | N/A | N/A | 294.2 | 275.8 | Howard Tiffen |
| Average/Total | 10.04 | 5.34 | 17719.6 | 17337.6 |